Borrowers have lots of choices among types of loans and lenders. Choosing wisely can save you a lot of money. Protect yourself from paying more for credit than you need to by understanding the different types of loans and lenders. Remember, if you borrow money that you cannot repay, you can lose your home, your car, your savings and your investments. Also, a court can order that your employer “garnish” your earnings, that is, withhold some of your pay on behalf of a creditor.
For some loans, called “secure loans,” you must put up “collateral” – something you own that the lender can take if you don’t repay the loan. Cars, homes and savings and investment accounts are common types of collateral. “Unsecured” loan, like credit cards, do not require collateral.